Stelco union balks at Deutsche Bank's plan, says it puts unsecured creditors ahead of retirees

By Ted A. Knutson

Washington, Nov. 19 - The United Steelworkers complained to the Ontario Superior Court Friday that Deutsche Bank's plan to infuse money into bankrupt Stelco, Inc. puts unsecured creditors ahead of pension obligations.

"The DB Commitment is simply DB paying itself and converting its debt from an unsecured to a senior secured position," said Canadian steelworkers national director Ken Neuman in a news release.

In an affidavit, Neuman also contended that the Deutsche Bank plan does not satisfy the requirement of an Oct. 19 Capital Process Order for a financing proposal that generates no less than $200 million worth of proceeds to the Hamilton, Ont., steel company.

"The DB commitment ... in fact leads to a reduction of $100-million in liquidity," said Neuman.

The steelworkers' head noted that Stelco regularly claimed pension liabilities were a major factor for seeking court protection from creditors.

Stelco pensions "are now compromised since secured debt, which will be significantly increased under the DB commitment once Stelco emerges from CCAA protection, comes first ahead of employees' claims against Stelco," Neuman said.

Stelco filed for protection under Canada's Companies' Creditors Arrangement Act on Jan. 29, 2004.

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